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Sponsor seeks lower excise rate for FDA-authorized heated tobacco products; public-health groups oppose
Summary
AB 536 would allow a lower excise-tax rate for heat-not-burn tobacco products authorized by the FDA as reduced-exposure and meeting a low youth-use post-market threshold, the sponsor said.
CARSON CITY — Assembly Bill 536, introduced on behalf of the Assembly Committee on Revenue, would create a reduced state excise-tax rate for heated tobacco products that (1) are intended to be heated rather than burned, (2) receive Food and Drug Administration authorization with a modified- or reduced-exposure claim, and (3) show youth-use below a specified post-market threshold.
Sponsor representatives from Philip Morris International and outside consultants told the committee the policy would price heated tobacco products lower than combustible cigarettes to create an incentive for adult smokers to switch to a noncombustion alternative.
"This provides the user with a nicotine experience similar to smoking, but without toxic smoke," said Dr. Brian Urkola, a scientific adviser for Philip Morris International, summarizing the company's experimental and clinical data about emissions reductions and biomarker changes among smokers who switch to heat-not-burn products.
Company representatives noted the FDA has issued a limited modified-risk authorization for one product (a reduced-exposure order) and argued that, paired with post-market surveillance showing low youth uptake, a lower tax could accelerate switching among current smokers and reduce secondhand-smoke exposure in venues such as gaming facilities.
Public-health scientists and state health officials testified in opposition or concern. Jennifer Pearson of the University of Nevada, Reno said independent research has not definitively confirmed long-term health benefits or population-level reductions in harm and noted the FDA granted an exposure-reduction authorization rather than a full reduced-harm order. "This product received the reduced exposure marketing allowance but not the reduced harm marketing allowance," she said, urging caution about premature tax breaks.
Altria (a rival tobacco company) and trade and public-interest groups also opposed the bill on administrative and equity grounds. Serena Kasama of Altria said the measure would give a 50% tax reduction to a single company's product sold currently only in a Texas test market and urged a broader, technology-neutral tax modernization instead. Revenue analysts and public-health officials warned potential revenue loss to the state is uncertain; one analysis presented by an industry opponent estimated a possible multi-million-dollar reduction if heated products captured market share and were taxed at a lower per-pack rate.
Supporters framed the measure as harm-reduction and an incentive to reduce combustible-cigarette smoking. Opponents urged caution, highlighted the potential fiscal impact and administrative complexities (including stamp sizes and master settlement agreement considerations), and requested more independent longitudinal evidence that the products reduce disease at the population level. No committee vote was recorded; the sponsor and stakeholders signaled additional negotiations on definitions and earmarking of any revenue adjustments.
